Market Maker Scandal Leads to Co-Founder Suspension at Movement Labs: In-Depth Report
Out of the Frying Pan and into the Mud:
Movement Labs, the team behind the MOVE token, is grappling with a PR crisis after suspending co-founder Rushi Manche, following the unraveling of a questionable market-making deal. This debacle has resulted in a $38 million token dump, trading bans on Binance and Coinbase, and widespread investor discontent.
Initially pitched as a standard liquidity arrangement, the deal between Movement Foundation and a third-party entity named Rentech has morphed into a story of alleged deceit, obscure middlemen, and internal strife threatening the integrity of Movement's native MOVE token.
The Disastrous Deal
The problems originate from a deal between Movement Foundation and Rentech, which was purportedly backed by Singapore-based financier Galen Law-Kun. According to leaked contracts and internal communications obtained by CoinDesk, Rentech was tapped to provide liquidity for MOVE tokens through the Chinese market maker Web3Port.
This led to a decision to transfer 66 million MOVE tokens to the unknown firm, equating to approximately 5% of the circulating supply. The terms of this deal, subjected to scrutiny by legal experts, were characterized as "unusual" and "risky."
For instance, one provision allowed Web3Port to liquidate tokens if MOVE's valuation hit a staggering $5 billion, splitting the profits 50/50 with Movement Foundation. Analysts suggest this created an incentive to inflate and dump the token.
Inevitably, when MOVE launched on Binance on December 9, 2024, wallets tied to Web3Port reportedly started offloading their holdings, triggering a $38 million sell-off. This massive sell-off caused Binance to ban the implicated market maker for alleged breach of contract.
The exchange communicated the situation to the Movement team, with the foundation claiming it was unaware of Web3Port's activities and immediately severed ties with the firm.
Following the CoinDesk expose, Coinbase announced it would suspend MOVE trading on May 15, attributing the suspension to the token's failure to meet their listing standards. The exchange has switched to limit-only mode, intensifying the noose around a rapidly worsening situation.
Manche under the Microscope
YK Pek, the foundation's general counsel, had initially dismissed the proposal between Movement and Rentech as "the worst deal I have ever seen." However, a revised version was eventually signed, leading to speculation about who pushed it through.
Co-founder Manche was the one who circulated the Rentech deal internally and has since been placed on administrative leave, pending a third-party investigation headed by Groom Lake. Movement Labs confirmed his suspension in a brief statement:
"This decision was made in light of ongoing events and as the third-party review is still being conducted by Groom Lake regarding organizational governance and recent incidents involving a market maker," the post read.
Manche, however, maintains he has been deceived by someone within the foundation, with insiders allegedly implicating unofficial advisor Sam Thapaliya as the key figure behind the scenes. The Zebec founder, who dismisses having any formal involvement in the deal, was not only copied on significant emails but was also reportedly present at Movement's San Francisco office during the chaotic token launch.
Consequently, MOVE's price plummeted by over 27%, dropping from an intraday high of $0.2543 to a new all-time low of $0.1848.
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- The controversial deal between Movement Foundation and Rentech, backed by Singapore-based financier Galen Law-Kun, involved transferring 66 million MOVE tokens to Web3Port for liquidity provision in the Chinese market.
- The terms of the deal, exposed by CoinDesk through leaked contracts and internal communications, were criticized as "unusual" and "risky," opening the door for potential token manipulation.
- shortly after Binance listed the MOVE token, wallets tied to Web3Port reportedly sold off their holdings, causing a $38 million sell-off and prompting Binance to suspend the implicated market maker for breach of contract.
- Coinbase followed suit, announcing the suspension of MOVE trading on May 15 due to its failure to meet listing standards.
- Co-founder Rushi Manche was suspended by Movement Labs, with the team implying that he may have played a role in pushing through the questionable Rentech deal.
- Amidst the crisis,canceled trading on Binance, and price plummet, Manche has denied any wrongdoing, pointing the finger at unofficial advisor Sam Thapaliya as the key figure behind the deal's shady machinations.
